Sec 1-Page 48

1. Question

A borrower applies for a $400,000 mortgage loan at a fixed interest rate. After reviewing the file, the lender declines the requested terms and instead offers a significantly smaller loan amount with a higher interest rate. The borrower refuses the revised terms.

Under ECOA, which statement best describes this situation?

A) The lender has taken adverse action because credit was refused substantially under the terms requested and the borrower did not accept the counteroffer
B) No adverse action occurred because the lender offered some type of financing
C) Adverse action applies only when an application is completely denied
D) The lender may avoid adverse action requirements by verbally discussing different loan terms

2. Question

A creditor reduces the available credit line on a borrower’s home equity account while leaving similarly situated borrowers unchanged. The reduction is not related to inactivity, delinquency, or default.

Which statement best reflects ECOA adverse action rules?

A) The action is not adverse action because home equity accounts are exempt
B) Adverse action may include termination or an unfavorable account change when the same action is not taken on all similar accounts
C) Credit line reductions are never considered adverse action
D) Adverse action applies only to first-lien mortgage applications

3. Question

A borrower with an existing credit line requests an increase in available credit. After reviewing the request, the creditor declines to approve the increase.

Under ECOA, how is this action generally treated?

A) A refusal to increase available credit upon request may constitute adverse action
B) Adverse action rules apply only to new credit applications
C) Credit line increase denials are exempt from Regulation B
D) A creditor may deny increases without adverse action implications if the account remains open

4. Question

A borrower agrees in writing to modify the terms of an existing mortgage account, including a change in the repayment schedule and interest rate.

Under ECOA, which statement is correct?

A) Any modification of account terms automatically constitutes adverse action
B) A change in account terms expressly agreed to by the applicant is not considered adverse action
C) Creditors must issue an adverse action notice for every loan modification
D) Agreed-upon loan modifications are prohibited under Regulation B

5. Question

A creditor suspends charging privileges on an account after repeated missed payments and ongoing delinquency under the account agreement.

Which statement best reflects ECOA treatment of this action?

A) Actions connected with inactivity, default, or delinquency under an existing account are generally not considered adverse action
B) Any action involving delinquency automatically requires a counteroffer
C) Creditors may not take action on delinquent accounts under Regulation B
D) Delinquency-related account actions always require prior CFPB approval

6. Question

A borrower requests financing for a type of loan product the creditor does not offer to any applicants.

Under ECOA, which statement is correct?

A) The creditor must create the requested loan product before denying the application
B) Refusing to extend a type of credit the creditor does not offer is not considered adverse action
C) The creditor must issue a counteroffer for a similar loan program
D) Regulation B prohibits creditors from limiting loan products offered to consumers

7. Question

A consumer attempts to use a credit card at a retail location, but the transaction is declined because the card has been reported stolen.

Under ECOA, which statement best reflects Regulation B?

A) Every point-of-sale decline constitutes adverse action
B) A refusal to extend credit at the point of sale may occur when the card has expired or has been reported stolen
C) Point-of-sale credit denials are prohibited under ECOA
D) Creditors must approve transactions involving previously issued cards regardless of fraud concerns

8. Question

A lender denies a mortgage application and issues an adverse action notice. The notice identifies the creditor and states the application was denied but does not explain the specific reasons for the denial or advise the borrower of the right to request them.

During a compliance review, regulators determine the notice violates Regulation B.

Which statement best reflects ECOA adverse action notice requirements?

A) Denial notices must include the creditor's name and address, the action taken, and either the specific reasons for denial or notice of the applicant's right to request those reasons
B) Specific reasons for denial are prohibited under Regulation B
C) Creditors may provide adverse action notices verbally only
D) Internal underwriting policies alone satisfy the disclosure requirement

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